The Jeff Bezos train shows no signs of slowing down with new innovations in store for 2H18.
Amazon (NASDAQ:AMZN) recently announced it has big plans unfolding in the next few months, both for itself and for American entrepreneurs. The e-commerce leader made two key moves last week, including officially agreeing to acquire online pharmacy PillPack and introducing its all-new distribution business, Delivery Service Partners. Together, these statements made many AMZN bulls even more favorable of the stock.
Monness’ top analyst Brian White blends right into Amazon’s herd of bulls, optimistic about each of its new business ideas.The analyst believes the acquisition of PillPack could revolutionize healthcare in the U.S. and set precedence for the long-term profitability of Amazon. White also views Delivery Service Partners as a possible catalyst to make AMZN more profitable, as well as an edge to give itself a positive public image.
PillPack truly is the “new kind of pharmacy” as it describes itself. The company operates first by attracting customers who consume a variety of pills weekly, then by sorting their pills into one bag that is delivered to their homes each month. This user-friendly process doesn’t call for any getting up or going to the pharmacy whatsoever; in fact, PillPack is put into direct contact with customers’ doctors so, if any medications need to be refilled or updated, the online pharmacy takes care of everything. In addition to doctors, PillPack is also in touch with customers’ insurance companies to manage all necessary bills/claims, and it also offers 24/7 customer support for any questions or concerns.
In 2016, U.S. pharmaceutical sales stood at only $333 million, a tiny figure compared to the $3.12 trillion in American healthcare expenditures the same year. Amazon’s acquiring and utilizing PillPack could help both to diminish this 15.5% GDP gap (1.9% to 17.4%) and to generate substantial profits. White maintains that Amazon’s joint venture in healthcare with JP Morgan and Berkshire Hathaway, combined with its already extensive network of customers and resources, could open up huge long-term opportunities for the company.
The PillPack project was showing plenty of promise alone, so when Bezos announced the launch of Delivery Service Partners as well, he sent the bulls in motion. DSP is Amazon’s newest business plan, a delivery program that gives everyday people the opportunity to run small-scale delivery services with Amazon products. Entrepreneurs are able to establish their own delivery networks with access to up to 40 Prime vans that pick up from one of AMZN’s 75 parcel stations across the U.S. White maintains that this move by Amazon is not only a chance to make itself more profitable, but it is also its chance to demonstrate its care for the well-being of the U.S. economy. Delivery Service Partners could both create new jobs for Americans as well as scale the company’s distribution costs much more effectively.
Considering the value these actions could add to Amazon, Monness places AMZN stock’s price target at $2,200, indicating a massive 28% return potential, while reiterating a Buy rating on the stock.
People often ask, is it worth listening to this analyst? In this case, the answer is clearly yes. White has a very good TipRanks score with a 67% success rate and a yearly average return of 16.2%. Impressively, White stands at #128 out of 4,823 on the analyst leaderboard.